Credit Risk Management - The overall credit risk management framework is based on International Financial Reporting Standards (IFRS) 9, which includes expected credit loss models [4]. - The financial instruments are categorized into three stages based on credit risk and impairment [5]. - The company reported a stable Stage 1 coverage ratio of 0.2% [8]. - The risk management section includes a comprehensive overview of credit risk and capital review [2]. - The expected credit loss coverage ratio is reported, indicating the proportion of expected credit losses to total loan balances [19]. - The bank's internal credit rating system categorizes loans into 14 grades, with grades 1 to 12 for performing loans and grades 13 to 14 for impaired loans [18]. - The expected credit loss provisions are segmented by business category and stage, providing insights into risk management strategies [19]. - The company employs various risk mitigation tools, including collateral and credit insurance, to reduce potential credit losses [49]. Customer Loans and Advances - The total amount of customer loans and advances is HKD 2,740 billion, with 94% classified in Stage 1, reflecting a focus on high-quality lending [7]. - Customer loans and advances amount to 286,975 million yuan, with a net risk exposure of 168,483 million yuan, down from 310,647 million yuan in the previous year [15]. - Total loans and advances amounted to 292.145 billion, with a breakdown of 273.692 billion in customer loans and 182.390 billion in unused commitments [20]. - The total amount of unused commitments is 182,390 million yuan, with a net risk exposure of 179,450 million yuan [15]. - The total amount of customer loans classified as high risk in 2023 were 8 million in China, while Hong Kong reported 0 million, maintaining a stable risk profile [78]. Credit Impairment - The credit impairment charge was a net expense of 508 million, down from 836 million as of December 31, 2022 [11]. - The total credit impairment amounted to 5.170 billion, with 1.215 billion attributed to the second stage of loans [20]. - The total credit impairment for the first stage is 44,384 million yuan, while the second stage shows a credit impairment of 540 million yuan [16]. - The total credit impairment for the year shows a decrease of 3,533 million compared to the previous year, indicating improved credit quality overall [22]. - The total credit impairment provisions for 2023 amount to (4.320) billion, compared to (4.457) billion in 2022, indicating a decrease of about 3.1% [46]. Coverage Ratios - The company maintains a stable overall coverage ratio of 76% after accounting for collateral [8]. - The provision coverage ratio increased to 72% for credit impairment in Chinese commercial real estate, up from 56% [13]. - The expected credit loss provisions based on model predictions were 1,071 million for 2023, down from 1,267 million in 2022, reflecting a reduction of approximately 15.4% [84]. - The coverage ratio for expected credit losses was 1% overall, with higher risk categories showing a coverage of 2% [27]. Economic Outlook and Projections - The global GDP growth forecast for 2024 is slightly below 3%, indicating a slowdown compared to the average growth of 3.7% from 2010 to 2019 [88]. - China's GDP growth is expected to slow from over 5% in 2023 to 4.8% in 2024, reflecting ongoing challenges in the real estate sector and declining consumer confidence [89]. - The projected GDP growth for China in 2024 is 4.8% [103]. - The company is utilizing Monte Carlo simulations to assess a range of 50 economic scenarios for expected credit losses, reflecting inherent uncertainties in economic forecasts [89]. Sector-Specific Insights - The total amount of loans in the higher risk category (15.751–99.999% probability of default) is 917 million, with a significant increase in credit impairment of 60 million [22]. - The total amount of loans classified as defaulted is 5,508 million, highlighting the need for ongoing risk management strategies [22]. - The total credit impairment for the third stage amounted to 2.499 billion, reflecting a decrease of 2.529 billion from the previous period [75]. - The total expected credit loss for satisfactory loans in 2023 was (149) million, compared to (119) million in 2022, indicating an increase in expected losses [78]. Risk Exposure - The total risk exposure in high-risk and cyclical industries decreased by 3 billion to 29 billion, mainly due to the exit from the aviation sector [12]. - The total risk exposure in Chinese commercial real estate decreased by 800 million to 2.6 billion, with the credit impairment ratio rising to 58% [13]. - The total maximum credit risk on the balance sheet as of December 31, 2023, is 1,055,148 million yuan, with a net risk exposure of 799,808 million yuan [15]. - The total net risk exposure (on and off-balance sheet) was 96,720 million in 2023, down from 99,807 million in 2022, indicating a decrease of approximately 3.1% [72].
渣打集团(02888) - 2023 - 年度业绩